Posted tagged ‘Gold Rush’

There’s gold in them hills

January 24, 2010

January 24 is an important day in history, as on this day in 1848 construction foreman James W. Marshall found some nuggets on gold in a river in Northern California. News of his find spread quickly, and by the following year (1849 – hence the ‘forty-niners’) some 300,000 people had come to California in what became known as the ‘Gold Rush‘. Nor was it all an illusion, because by the time most of the available gold had been mined in 1855 or so the total value of the extracted precious metal had come to some $3 billion, a staggering amount worth many times that in today’s money.

The significance of the Californian Gold Rush goes far beyond this, however. It played a crucial role in shaping America’s general outlook and the pioneering spirit. It created the wealth that put substance into the American financial and banking system, amongst other things thereby making it possible for the United States some 65 years later to fund the Allies’ war effort in World War I which, in turn, paved the way for US pre-eminence in the world economy. It more or less invented California as we now know it, and which before then had been a somewhat disorganised backwater. It laid the foundations for San Francisco (essentially a village until then) and, by extension, what became Silicon Valley. On the other hand, it illustrated the power of greed as well as the social side-effects of that greed, including fraud, ruin, alcohol abuse and prostitution (all of which became common features of the Gold Rush).

But perhaps to a greater extent than we sometimes realise, the Gold Rush was one of the small number of defining developments that laid the foundations for the modern market economy and the financial instruments and structures that under-pin it. It is not some quaint historical interlude best remembered in songs such as ‘Oh My Darling Clementine’ and ‘Muirsheen Durkin’; it is a piece of history with very far-reaching effects that are still with us, for good or ill.

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